BEARISH DOJI
STAR
| Type: | Reversal |
| Relevance: | Bearish |
| Prior Trend: | Bullish |
| Reliability: | Medium |
| Confirmation: | Suggested |
| No. of Sticks: | 2 |
A doji following a white candlestick with an upside gap during an uptrend, is the Bearish Doji Star Pattern.
Recognition Criteria:
1. Market is characterized by uptrend.2. We see a long white candlestick in the first day.
3. Then we see a Doji that gaps in the direction of the previous trend on the second day.
4. The shadows of the Doji are not long.
Explanation:
Bulls control the market in a strong uptrend. The appearance of a Bearish Doji Star Pattern in such an uptrend shows that buyers are now losing the control and market is moving to a deadlock between buyers and sellers. This deadlock or balance between buyers and sellers may result because of a diminution in the buying force or an increase in the selling force. Whatever the reason is, the star tells us that the strength of uptrend is now dissipating and the market is increasingly vulnerable to a setback.
Important Factors:
A confirmation on the third day is required to convincingly show that the uptrend has reversed. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the next trading day.